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Using the MACRS rates from the following table, what is the book value of a $3,500 computer after 2 years? Year MACRS Rate 1 20.0 % 2 32.0% 3 19.2 % 11.52% 11.52 % book value = [?] Round to the nearest hundredth. 45

Using the MACRS rates from the following table, what is the book value of a $3,500 computer after 2 years? Year MACRS Rate 1 20.0 % 2 32.0% 3 19.2 % 11.52% 11.52 % book value = [?] Round to the nearest hundredth. 45

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 7EB: An auto repair company needs a new machine that will check for defective sensors. The machine has an...
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using the macrs rates from the following table, what is the book value of a $3500 computer after 2 years?

### Modified Accelerated Cost Recovery System (MACRS) **Problem Statement:** Using the MACRS rates from the following table, what is the book value of a $3,500 computer after 2 years? **MACRS Depreciation Rates:** | Year | MACRS Rate | |------|------------| | 1 | 20.0 % | | 2 | 32.0 % | | 3 | 19.2 % | | 4 | 11.52 % | | 5 | 11.52 % | **Instruction:** Round the final answer to the nearest hundredth. **Equation to use:** \[ \text{Book Value After 2 Years} = \text{Initial Value} \times (1 - \text{Depreciation Year 1}) \times (1 - \text{Depreciation Year 2}) \] **Step-by-step Calculation:** 1. Initial Value = $3,500 2. Depreciation for Year 1 = 20.0% 3. Depreciation for Year 2 = 32.0% Let's break this down: 1. After Year 1: \[ \text{Value After Year 1} = 3500 \times (1 - 0.20) = 3500 \times 0.80 = 2800 \] 2. After Year 2: \[ \text{Value After Year 2} = 2800 \times (1 - 0.32) = 2800 \times 0.68 = 1904 \] So, the book value of the computer after 2 years is $1904.00. **Interactive Element:** - Enter the calculated book value and verify with an interactive feature to validate understanding and correctness of the computation. **User Input:** \[ \text{book value} = \text{[ ]} \] **Note:** Please round to the nearest hundredth. After completing the calculation, click the Enter button to check your answer.
Transcribed Image Text:### Modified Accelerated Cost Recovery System (MACRS) **Problem Statement:** Using the MACRS rates from the following table, what is the book value of a $3,500 computer after 2 years? **MACRS Depreciation Rates:** | Year | MACRS Rate | |------|------------| | 1 | 20.0 % | | 2 | 32.0 % | | 3 | 19.2 % | | 4 | 11.52 % | | 5 | 11.52 % | **Instruction:** Round the final answer to the nearest hundredth. **Equation to use:** \[ \text{Book Value After 2 Years} = \text{Initial Value} \times (1 - \text{Depreciation Year 1}) \times (1 - \text{Depreciation Year 2}) \] **Step-by-step Calculation:** 1. Initial Value = $3,500 2. Depreciation for Year 1 = 20.0% 3. Depreciation for Year 2 = 32.0% Let's break this down: 1. After Year 1: \[ \text{Value After Year 1} = 3500 \times (1 - 0.20) = 3500 \times 0.80 = 2800 \] 2. After Year 2: \[ \text{Value After Year 2} = 2800 \times (1 - 0.32) = 2800 \times 0.68 = 1904 \] So, the book value of the computer after 2 years is $1904.00. **Interactive Element:** - Enter the calculated book value and verify with an interactive feature to validate understanding and correctness of the computation. **User Input:** \[ \text{book value} = \text{[ ]} \] **Note:** Please round to the nearest hundredth. After completing the calculation, click the Enter button to check your answer.
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